On August 22, 2012, the U.S. Securities and Exchange Commission (the “SEC”) adopted new rules relating to disclosure of payments by so-called “resource extraction issuers” (the “Final Rules”) pursuant to Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Final Rules require resource extraction issuers to include in an annual report information relating to any payment made by the issuer (including by any subsidiary or entity controlled by the issuer) to a foreign government or the U.S. Federal Government for the purpose of commercial development of oil, natural gas or minerals. These Final Rules are intended to (i) promote international transparency and accountability and (ii) prevent bribery and corruption in the resource extraction industry. The Final Rules are expansive in nature and provide no exceptions to the reporting obligations set forth in the Final Rules. As a result, many resource extraction companies that have U.S. public reporting obligations will be affected by the Final Rules.

Companies Affected by the Final Rules -

The Final Rules affect all so-called “resource extraction issuers,” which is defined to be companies that are reporting companies, both foreign and domestic, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are engaged in the commercial development of oil, natural gas or minerals (“Resource Extraction Issuers”). The “commercial development of oil, natural gas or minerals” includes the activities of exploration, extraction, processing and export and the acquisition of licenses for any of those activities, but excludes ancillary businesses such as the manufacturing of equipment used in the commercial development of oil, natural gas or minerals.

What Must Be Reported The Final Rules provide that any “payment” that is “not de minimis” made by a Resource Extraction Issuer to a foreign government or the U.S. Federal Government must be reported. “Payment,” within the meaning of the Final Rules, means any payment made to a foreign government or the U.S. Federal Government that is made to further the commercial development of oil, natural gas or minerals.